In the latest development in parallel cases captioned EQT Prod. Co. v. Department of Environmental Protection which have been moving through Pennsylvania state courts and the Environmental Hearing Board ("EHB") since early 2014, the Commonwealth Court of Pennsylvania affirmed the EHB’s assessment of penalties totaling $1,137,295.76 against the hydraulic fracturing company, EQT Production Company (“EQT”), for contamination to groundwater arising from a leaking wastewater impoundment. EQT Prod. Co. v. Dep’t of Envtl. Prot., No. 844 C.D. 2017, 2018 WL 4289310 (Pa. Commw. Ct. Sept. 10, 2018). Specifically, on September 10, 2018, the Commonwealth Court held that the EHB did not commit an error of law when it held that, under Clean Streams Law (“CSL”), penalties could be assessed for every day that contamination entered the groundwater from soils “through fundamental hydrologic principles,” even if the initial spill event had ceased and there was no direct evidence of daily transmission of contamination from soil to groundwater. Read More »

Last week, the Pennsylvania Supreme Court issued its highly anticipated opinion in EQT Prod. Co. v. Dep’t of Envtl. Prot., No. 6 MAP 2017, 2018 WL 1516385, (Pa. Mar. 28, 2018), holding that the Clean Streams Law (“CSL”) does not authorize the Department of Environmental Protection (“DEP”) to impose daily penalties for the ongoing, continuing presence of pollutants in waters of the Commonwealth. In the 5-to-2 decision, which affirmed in part the Commonwealth Court’s preceding opinion, the Court ruled that to construe the language of the CSL as allowing penalties for the movement of pollutants from one water body to another (DEP’s “water-to-water” theory) was not only unsupported by the statutory language, but would also expose the regulated community to potentially massive civil penalties, and as such, DEP’s penalty calculations including penalties for the days the pollutants remained in the affected groundwater after the initial discharge were excessive. Read More »

Last month, in U.S. v. CITGO Petro. Corp., 711 Fed. Appx. 237 (5th Cir. 2017), the United States Court of Appeals for the Fifth Circuit affirmed an $81 million civil penalty assessment under the federal Clean Water Act (“CWA”) against CITGO Petroleum Corp. (“CITGO”), for unpermitted wastewater discharges from its plant in Lake Charles, Louisiana when a severe rainstorm caused two storage tanks to fail and over 2 million gallons of oil to be discharged into local waterways. In the underlying case before the United States District Court for the Western District of Louisiana, CITGO conceded liability, and therefore, the only issue for trial was the total penalty to be assessed. After a two-week bench trial, the District Court determined that CITGO had failed to properly maintain its wastewater storage tanks and allowed sludge and waste oil to accumulate in the tanks, which lessened their total storage capacity and ability to withstand a storm surge. The District Court ultimately assessed a $6 million civil penalty against CITGO, which EPA appealed. Read More »

Is a leaking pipeline indicative of an operator’s failed attempt to consider all relevant risk factors when the pipeline has had leaks in the past? In the context of pipeline integrity management regulations, the Court of Appeals of the Fifth Circuit said no. On August 14, 2017, the Court vacated, in part, a final order issued by the Pipeline Hazardous Materials Safety Administration (“PHMSA”) to ExxonMobil Pipeline Company (“ExxonMobil”), which found that ExxonMobil failed to properly consider the susceptibility of certain portions of its Pegasus Pipeline to seam failure and assessed a civil penalty of $2.6 million. The opinion in ExxonMobil Pipeline Company v. United States DOT determined that, despite an oil leak from its Pegasus Pipeline, ExxonMobil was not in violation of PHMSA regulations requiring it to consider all risk factors that reflected the risk conditions on a certain pipeline segment because ExxonMobil “carefully [underwent] an informed decision-making process in good faith, reasonably taking into account all relevant risk factors in reaching a decision” that the pipeline was not at risk of seam failure. 2017 U.S. App. LEXIS 15144 (Aug. 14, 2017). Read More »

Under the Clean Water Act (“CWA”), it is well established that any entity discharging pollutants into the surface waters of the United States from a “point source” must obtain a permit. But courts have disagreed on whether the CWA also encompasses groundwater that is hydrologically connected to surface water. Last week, a federal district court in Virginia followed a line of cases in holding that the CWA does cover the discharge of pollutants to groundwater that is hydrologically connected to surface water. Sierra Club v. Va. Elec. & Power Co., Civil Action No. 2:15-CV-112 (E.D. Va. Mar. 23, 2017). Read More »

In the latest development in the ongoing dispute between EQT Production Company (“EQT”) and the Pennsylvania Department of Environmental Protection (“DEP”) over DEP’s calculation of continuing violations of the Clean Streams Law (“CSL”), the Pennsylvania Commonwealth Court held that Section 301 of the CSL prohibits acts or omissions resulting in the initial active discharge or entry of industrial waste into waters of the Commonwealth, and does not authorize ongoing penalties for the continuing presence of that industrial waste in waters of the Commonwealth after its initial entry. The Commonwealth Court’s decision in this case, EQT Production Co. v. Dept. of Envt’l Prot., No. 485 M.D. 2014 (Jan. 11, 2017), comes over one year after the Pennsylvania Supreme Court decided EQT Production Co. v. Dept. of Envt’l Prot., 130 A.3d 752 (Pa. 2015), which we reported on, holding that EQT may be permitted to challenge DEP’s continuing-violation interpretation in the Commonwealth Court before the Pennsylvania Environmental Hearing Board decides and imposes the ultimate penalty, given the threat of ballooning penalties under DEP’s ongoing-violation interpretation. Read More »

Last week, the 10th Circuit Court of Appeals affirmed dismissal of a Sierra Club citizen suit against a coal-fired power plant for an alleged permitting violation of the Clean Air Act, finding that the Sierra Club’s claims were time-barred. In the case, Sierra Club v. Okla. Gas & Elec. Co., No. 14-7065 (10th Cir. March 8, 2016), the court held that the Sierra Club’s claims for civil penalties were statutorily time-barred because they were brought more than five years after the power plant began its unpermitted modification of a boiler, an action which the Sierra Club claims violated the Prevention of Significant Deterioration (PSD) program under the Clean Air Act. The court also affirmed dismissal of the group’s claims for injunctive and declaratory relief because those legal claims were predicated on the same facts as the time-barred civil penalties. The court’s interpretation of the statute of limitations as applied to the PSD program is consistent with a 2011 district court decision in the 3rd Circuit, United States v. EME Homer City Generation L.P., et al., which we reported on here. Read More »

To close out 2015, the Pennsylvania Supreme Court issued several opinions last week, including one that may potentially impact how parties challenge penalties assessed by the Pennsylvania Department of Environmental Protection (“DEP”) for violation of state environmental laws. The case, EQT Production Co. v. Dept. of Envt’l Prot., No. J-67-2015 (Dec. 29, 2015), involves a challenge by EQT, a natural gas fracking operator, to civil penalties levied by DEP for contamination caused by a leaking fracking water impoundment. EQT had already commenced a formal cleanup under Pennsylvania’s “Act 2” voluntary remediation program when DEP issued a civil penalty settlement demand under Pennsylvania’s Clean Streams Law for over $1.27 million, $900,000 of which was tied to ongoing violations. DEP took the position that each day the contamination remained in the soil and/or entered groundwater or surface water constituted a continuing violation subject to additional penalties. EQT disagreed and argued that under the Clean Streams Law, penalties could not exceed those that accrued during the time that contamination was actually being discharged into the environment. The operator also argued that the Act 2 program governed their remediation efforts to address the contamination that remained at the site. Read More »